Out-Law / Your Daily Need-To-Know

Electronic cigarettes and food and drink products with added sugar or sweeteners will be subject to excise tax in the United Arab Emirates from the beginning of 2020.

The decision to expand the UAE's fledgling excise tax regime to products was announced by the governing executive in the UAE on Tuesday. Excise tax was only introduced for the first time on certain goods in late 2017.

Under the new regime, which will apply from 1 January next year, a 50% excise tax will be levied on any product with added sugar or other sweeteners, whether they are in the form of a beverage, liquid, concentrate, powder or extract, or any product that may be converted into a drink.

A 100% excise tax will also be imposed on electronic smoking devices and the liquids used in them, the general secretariat to the Cabinet of the UAE confirmed.

The new taxes are designed to "reduce consumption of unhealthy goods and modify consumers’ behaviour", the general secretariat said.

Dubai-based tax expert Joanne Clarke of Pinsent Masons, the law firm behind Out-Law, said: "This announcements is perhaps unsurprising given the extension of excise taxes to similar products across the wider Gulf Cooperation Council states, together with the fact that there is the digital stamp tax (DST) legislation for e-cigarettes already on the agenda for imports and supplies of e-cigarettes from Nov 2019 and Mar 2020, respectively."

The general secretariat's announcement comes after the UAE's Federal Tax Authority unveiled an electronic system for registering excise goods earlier this month.